On the move
Every so often we experience a touch of déjàƒ vu. Just a year ago Clinton`s extra curricula activities made headline news. At the same time, although without quite the same impact, the new look PEi was unveiled à‚– with a new address. It seems that a year later, in some ways we are back to where we started. Again the US` `main man` is in the spotlight à‚– the news this time is that he may avoid having to `move house` early. PEi was not so lucky. On the anniversary of our relaunch we have now moved to a new premises (take note of the new address on the contents page). The move brings our magazine and events expertise under the same roof – a form of consolidation not too unlike what began in the power industry just over a year ago.
As we come out of 1998 and move into 1999, it is the turn of the oil companies. Low oil prices continued to force consolidation in the industry last December as oil giants Exxon and Mobil agreed a $75 billion merger deal à‚– the world`s largest.
In a similar deal in Europe, Total of France is to take over PetroFina of Belgium to create one of the six largest oil companies in the world, and Europe`s third largest in production in revenue terms.
Meanwhile, the global money crises continue. At the moment it is Brazil. A currency devaluation in early January has prompted fresh fears among investors of a deep recession. The Real has lost 35 per cent of its value since the central bank abandoned its peg exchange rate against the US dollar. The deepening financial crisis and the failed attempt to privatize Alagoas state power utility Ceal has cast doubt on the future of Brazil`s privatization programme.
Brazil`s decision to devalue its currency has stiffened Malaysia`s resolve to keep the currency controls it introduced last September. Finance minister Mustapa Mohamad said the controls were working and that Malaysia was nervous of another bout of speculation hitting financial markets. The controls, combined with a plan for divesting five power plants under its restructuring plan, are expected to help power utility Tenaga Nasional Bhd (TNB) come back into profit this year.
Although many economists believe the crisis in Asia has bottomed out, it will still be some time before this market returns to its former level. Japan, where the collapse first began, is still feeling the effects. Japan`s largest machinery manufacturer Mitsubishi Heavy Industries has said that a collapse in orders and the continued economic weakness in Asia could force it to cut its earnings forecast for 1999. The company suffered a sharp fall in profits in 1998.
The crises in Asia and Latin America has seen money moving towards central and eastern Europe, particularly Poland, Hungary and the Czech Republic.
Poland is now in the process of liberalizing its energy sector through asset privatizations and introducing competition between energy producers. The privatizations will raise $20-$30 billion of capital needed for modernization of the sector.
The Hungarian government is to introduce a new pricing system for its electricity and gas markets this year as part of plans to gradually liberalize the energy sector and bring it in line with EU standards.
Indeed this year will see major changes in the EU. In preparation for competition and the EU directive on electricity liberalization, a few countries have begun to set up trading arrangements.
The Amsterdam Power Exchange began operating at the beginning of the year. In the UK, the electricity regulator has published a framework document which sets out the structure of the new electricity trading arrangements. A target deadline of April 2000 has been set for the arrangements to be implemented. Meanwhile Deutsche Bàƒ¶rse, the operator of the Frankfurt stock exchange, has announced that it will begin trading electricity futures contracts and hopes to have an energy exchange operating by the end of the year.
Even France, which will be one of the last nations to liberalize its markets, has approved a draft law to liberalize the country`s electricity market.
With things moving so rapidly it`s difficult to keep up. I still have difficulty remembering our new address. I wonder if Clinton will face the same problem?